|
Citation: 2003TCC885
|
|
Date: 20031203
|
|
Docket: 2000-4698(IT)G
|
|
BETWEEN:
|
|
WAYNE A. FARROW,
|
|
Appellant,
|
|
And
|
|
|
|
HER MAJESTY THE QUEEN,
|
|
Respondent.
|
REASONS FOR ORDER
Bowman, A.C.J.
[1] This is a motion to set aside a
judgment dismissing appeals from assessments for the 1991, 1992
and 1993 taxation years. I reserved judgment because the motion
raises a couple of novel points that I thought needed a little
more consideration.
[2] The day before this motion was
heard counsel for the appellant served on counsel for the
respondent an affidavit of Mr. Farrow. Obviously the
affidavit should have been filed much earlier. Counsel's
explanation was that Mr. Farrow was hospitalised with a
stroke. I asked Ms. Truscott, counsel for the respondent, if
she wanted an adjournment so that she could cross-examine
Mr. Farrow or file an affidavit on behalf of the respondent.
She informed me that she wished to proceed and I therefore heard
the motion on the basis of the material on the file.
[3] The facts are as follows. The
appellant was reassessed for 1991, 1992 and 1993 on May 30,
1997. On July 15, 1997 and October 6, 1997 he
objected to the reassessments. A notice of confirmation was
mailed to him on July 26, 2000. On October 23,
2000 his counsel filed a notice of appeal to this court and the
respondent filed a reply on February 15, 2001. The notice of
appeal did not give the appellant's home or business address but
gave only the address of his counsel,
Mr. David J. McLellan.
[4] A status hearing was held on March
11, 2002. Mr. McLellan informed the court that he was
no longer in communication with Mr. Farrow and the status
hearing was adjourned. He subsequently filed a notice of
intention to cease to act as counsel and gave the appellant's
address as 208-1448 Johnston Road,
White Rock, British Columbia. This address was wrong.
The Appellant had moved.
[5] The respondent then tried to serve
the appellant personally with a new notice of status hearing and
sent the notice to 2295-124th
Street, Surrey, British Columbia and also to the
address on Johnston Road in White Rock,
British Columbia. Both letters were returned by Canada
Post.
[6] The respondent then brought a
motion to dismiss for want of prosecution and notice was sent to
the Johnston Road address. It was returned to the court,
undelivered.
[7] The motion was heard by Bell J. on
October 11, 2002. It was granted and the appeals were dismissed.
Originally the judgment stated that the appeal was dismissed
because the appellant failed to appear at the hearing of this
appeal. At the request of counsel for the respondent this was
corrected and an amended judgment was issued reflecting the fact
that the appeal was dismissed on motion for want of
prosecution.
[8] Mr. Farrow states in his
affidavit that he mistakenly concluded that the matter had been
resolved and so did not stay in touch with his lawyer. This was a
foolish and negligent assumption. Anyone with the most casual
familiarity with the workings of our taxing authorities should
know that assessments for over $150,000 do not, with the
effluxion of time, simply evaporate into thin air.
[9] At all events, Mr. Farrow
seems to have remained ignorant of the fact that his appeal had
been dismissed and that his own lawyer had ceased to act for him.
This state of obliviousness came to an end when the Canada
Customs and Revenue Agency, on January 10, 2003, sent him a
statement of account.
[10] On July 7, 2003,
Mr. McLellan, who had been rehired by the appellant, wrote a
letter to the court asking to have the dismissal set aside and
the appeal reinstated.
[11] This had been a comedy of errors.
Clearly, Mr. Farrow is largely the author of his own
misfortunes but I think his lawyer must bear some of the
responsibility as well for not providing the court and the
respondent with Mr. Farrow's correct address.
[12] Certainly no criticism can be made of
the respondent or her counsel.
[13] There is no suggestion that the court
does not have the power to set aside the dismissal of the appeal.
Quite apart from the court's inherent jurisdiction, subsection
140(2) of the Tax Court of Canada Rules (General
Procedure) gives the court that power and sections 9 and 12
of the Rules permit the extension of time to apply.
[14] I think in all the circumstances it is
in the interests of justice that I set aside the judgment
dismissing the appeal and allow the appellant to proceed. In
exercising my discretion I am taking into account the fact that
although the appellant must bear most of the responsibility for
the situation that has arisen, he did not in fact know of the
dismissal of his appeal or the withdrawal of his lawyer.
Moreover, the amount of money involved in the appeal is
substantial - about $165,000 - and he should be given the
opportunity to contest it. The delay in bringing the motion is
unfortunate but it has not occasioned any serious prejudice to
the Crown.
[15] Counsel argued that apart from
attaching the notice of appeal and the reply to the notice of
appeal to his affidavit, the appellant has not demonstrated that
he has an arguable appeal. I agree that the court must be
satisfied that a litigant who seeks to have a default judgment
set aside has an arguable case, but the threshold is a relatively
low one. I do not think a litigant needs to testify or call
evidence to show that there is a prima facie case.
Moreover, it does not add much to the strength of the applicant's
case for him or his solicitor to make the self-serving
statement "I believe that I have a good case". In Hamel v.
Chelle, 48 WWR 115, the Saskatchewan Court of Appeal
discussed the point at page 118:
Learned counsel for the plaintiff contended that
as the affidavit filed in support of the application was that of
the solicitor based upon information and belief, the material was
not sufficient to enable the court to act. In support of this
contention, he relied upon the decision in Miller and Smith v.
Ross (1909) 12 WLR 315, 2 Sask LR 449. In that case the
solicitor filed an affidavit in which he stated (at p. 451):
"'I believe that the defendants have a good defence as set
out in the statements of defence drawn herein, and that they
should be permitted to try such action on their defences.'"
Wetmore, C.J. held this affidavit not to be
sufficient, but then, on the same page, he went on to say:
"I am not prepared to say that if Mr. Panton had stated
as the reasons for his belief that 'he had been so informed by
the defendant,' it might not have been sufficient on an
interlocutory application like the present."
[16] It appears from the notice of appeal
and the reply to the notice of appeal that there is a justiciable
issue. The appeal is obviously not frivolous. It seems clear from
the pleadings that the question is one of fact and may depend on
the credibility of witnesses. This is something that on a motion
of this type I cannot determine. It should be decided at trial by
a judge who will have an opportunity of seeing the witnesses. I
am satisfied that the material discloses that the appeal has
sufficient merit that it should be permitted to proceed.
[17] The principles upon which the court
will set aside a default judgment are discussed further in
Hamel, (supra). At pages 117-118 Culliton,
C.J.S. said:
The principles upon which a court in its
discretion will act to set aside a judgment legally entered were
set forth by Lamont, J.A. in Klein v. Schile [1921] 2
WWR 78, 14 Sask LR 220, when he said at p. 79:
"The circumstances under which a Court will
exercise its discretion to set aside a judgment regularly signed
are pretty well settled. The application should be made as soon
as possible after the judgment comes to the knowledge of the
defendant, but mere delay will not bar the application, unless an
irreparable injury will be done to the plaintiff or the delay has
been wilful. Tomlinson v. Kiddo (1914) 7 WWR 93, 29 WLR
325, 7 Sask LR 132; Mills v. Harris & Craske (1915) 8
WWR 428, 8 Sask LR 114. The application should be supported
by an affidavit setting out the circumstances under which the
default arose and disclosing a defence on the merits. Chitty's
Forms, 13th ed., p. 83.
"It is not sufficient to merely state that the
defendant has a good defence upon the merits. The affidavits must
show the nature of the defence and set forth facts which will
enable the Court or Judge to decide whether or not there was
matter which would afford a defence to the action. Stewart v.
McMahon (1908) 7 WLR 643, 1 Sask LR 209.
"If the application is not made immediately after
the defendant has become aware that judgment has been signed
against him, the affidavits should also explain the delay in
making the application; and, if that delay be of long standing,
the defence on the merits must be clearly established.
Sandhoff v. Metzer (1906) 4 WLR 18 (N.W.T.)."
[18] The application is allowed and the
judgment dismissing the appeals is set aside.
[19] In light of the fact that the
respondent was entirely blameless and the problem was caused by
the appellant I am awarding the Crown its costs of this motion
and of the motion to dismiss, fixed at $1,000, and payable in any
event of the cause.
Signed at Montréal, Quebec this 3rd day of
December, 2003.
A.C.J.
Email this Content